74
Weedman character was created and is the sole property of and owned by Chloë Kyron. All rights reserved. The image including any likeness cannot be used in any manner without the expressed written consent by Chloë Kyron.
Any company referenced is purely for discussion purposes and not intended as a recommendation.
Louis Kyron, CPA, CGA
You may have come across posts on Social Media and on Bulletin Boards that put forth the supposition that banks lend out shares belonging to their own clients including lending to short sellers. But not to worry because these same posters provide the solution and that is to simply set up an open sell order at a very high price because doing so sets up an active sell-order thereby preventing your broker from lending out your shares to short sellers. Linked closely to this is their supposition that Stop Loss orders show on Level 2 so be careful because traders can manipulate a share price on a low volume day just to start triggering these visible stop loss orders. Are any of these true?
Ironically, the one that sounds the most far-fetched may be true for some. Your Financial Institution (or brokerage) may be able to lend out your shares to short sellers. Nice eh? Charge you a fee and then work against your objective all the while charging fees to the short seller as well. Check the terms of your own agreement carefully to see if this applies to you. My own brokerage, for example, can use my securities.
The other two are pure myth.
I verified with one of Canada’s leading brokerages that …
“Regardless of an open order, any shares that are held in your account can be used by …”
“I can confirm that your stop loss would not show on level 2 quotes until the stop loss has been triggered”.
To summarize (and these are typical … your own broker may be different):
1) Can brokers lend out your shares
to short sellers? YES
2)Do stop loss orders show on Level 2 when set up? NO – only when the sell price is reached.